What Is the Stock Market?

The term stock market refers to several exchanges in which shares of publicly held companies are bought and sold. Such financial activities are conducted through formal exchanges and via over-the-counter (OTC) marketplaces that operate under a defined set of regulations. 

Both “stock market” and “stock exchange” are often used interchangeably. Traders in the stock market buy or sell shares on one or more of the stock exchanges that are part of the overall stock market.

The leading U.S. stock exchanges include the New York Stock Exchange (NYSE) and the Nasdaq.

KEY TAKEAWAYS

  • Stock markets are venues where buyers and sellers meet to exchange equity shares of public corporations.
  • Stock markets are components of a free-market economy because they enable democratized access to investor trading and exchange of capital.
  • Stock markets create efficient price discovery and efficient dealing.
  • The U.S. stock market is regulated by the Securities and Exchange Commission (SEC) and local regulatory bodies.12
Mohsen Haghi

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